Reframing the Conversation on Drug Pricing and Healthcare Consolidation

““If every drug in the world were abolished, a physician would still be a useful member of society.”

— Sir William Withey Gull

WE ALL KNOW that drug pricing is starting to get out of hand. In the United Kingdom, Public Health England (PHE) has reported that up to a fifth of antibiotic prescriptions are unnecessary because many illnesses get better on their own. They believe that more patients should be told to go home and rest instead of being given antibiotics, and the BBC reports that “overusing the drugs is making infections harder to treat by creating drug-resistant superbugs.” If we continue at the current trajectory, by 2050, drug-resistant infections around the world are expected to kill more people than currently die from cancer.

This ties into a firmly held belief of mine, a belief which is shared by the authors of an article for the New England Journal of Medicine about how we can reframe the conversation on drug pricing. They cite the “tsunami” of healthcare costs that are caused by Alzheimer’s disease, a figure which is set to increase from $259 billion in 2017 to $1 trillion by 2050.

“Our society can’t afford for current trends to continue,” they explain. “There is only one solution, and it isn’t building more efficient hospitals, healthcare delivery systems and nursing homes. It is discovering new drugs that arrest, delay, prevent or cure the disease.”

They’re right, in a way, but there isn’t just one solution. New drugs may well help of course, but that doesn’t mean they’re the be-all-and-end-all. Preventative medicine encompasses so much more than just drugs, including lifestyle factors and other contributing factors that right now, we might not even be aware of. This is where artificial intelligence can shine, identifying commonalities between Alzheimer’s patients that we’ve never noticed before and giving us a better chance to head it off at the pass.

When it comes to drug development, the authors say, “So far, these attempts have largely failed. More than 400 clinical trials of more than 200 agents yielded only one approved drug for Alzheimer’s disease in the period 2002 – 2012. The failure rate at the clinical trial stage has been a staggering 99%, and that doesn’t include agents that didn’t make it out of the lab. Abandoning the search is not an option unless the patients who suffer from this dreaded disease are also abandoned. Each failure advances our knowledge and increases our chances for eventual success. But it will be a costly search. In general, the average cost to develop a drug tops $2.5 billion, according to a Tufts University study published last year.”

This is where the fun begins. At $2.5 billion for just one breakthrough in one disease, you can imagine how expensive it becomes when we look at healthcare as a whole. As explained in the NEJM, “For companies to justify risking billions on finding a breakthrough drug, they need to be able to anticipate a corresponding return on their investment. But at the same time, the patients who can benefit from a drug need to have access to it without facing bankruptcy, and health insurers need to feel confident that they will reap a return on their investment.”

There’s no simple answer to this dilemma, although the authors of the article have some interesting suggestions that I won’t go into here – because you should follow the source link if you want to find out more.



Consolidation is the process of big companies buying up smaller companies and absorbing them to form a composite whole. A great example of this is the $77 billion merger of CVS and Aetna. CVS is the biggest pharmacy chain in the US by both number of locations and prescription revenue, while Aetna is the nation’s third-largest insurance company. Meanwhile, CVS partners Epic are the largest electronic health record vendor.

The interesting thing about this is that the huge size of each of the three companies and the fact that they’re all aligned together means that we could be about to see a new era of interoperability, at least amongst the key players. CVS Health CEO Larry Merlo said, “The traditional healthcare system lacks the key elements of convenience and coordination that help to engage consumers in their health. That’s what the combination of CVS Health and Aetna will deliver.”

Carolyn Y. Johnson discussed the deal in an article for The Washington Post back when it was just a rumor. She said, “A successful deal could push millions of Aetna’s members towards CVS’s retail pharmacies, walk-in MinuteClinics and home services for infusion drugs at a time when retail pharmacy companies are facing stiff competition. It would also give Aetna the ability to move deeper into the lives of the 44.7 million people it serves and manage their healthcare more efficiently. For example, the insurer might be able to create better coordination of care using insights from CVS’s retail clinics and pharmacies.”

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Want to learn more?

I talk more about new technologies and their impact on the healthcare industry in my book, The Future of Healthcare: Humans and Machines Partnering for Better Outcomes. Click here to buy yourself a copy.

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